Event: on January 19, 2023, the company released "2022 results KuaiBao". The company expects revenue of 6.35 billion yuan in 2022, an increase of 15.74% over the same period last year, and a net profit of 541 million yuan, an increase of 0.43% over the same period last year. The company expects to achieve a net profit of 496 million yuan, an increase of 26.28% over the same period last year.

Revenue and profits have increased steadily, and profitability has improved significantly: the company is expected to achieve an income of 1.702 billion yuan in the fourth quarter of 2022, an increase of 6.8% over the same period last year and 6.5% month-on-month. The domestic epidemic is serious in the fourth quarter. And in December, production and operation activities in most parts of the country were affected by changes in epidemic control policies, while the company still achieved steady year-on-year and month-on-month growth, showing the company's strong management ability. The company is expected to achieve a net profit of 137 million yuan in the fourth quarter, an increase of 12.3% over the same period last year, a decrease of 8.7% over the previous year, and an estimated deduction of 118 million yuan in non-net profit, an increase of 28% over the same period last year and a decrease of 17.5%. From the perspective of the whole year, the company is expected to achieve a total profit of 610 million yuan in 22 years, + 0.81% compared with the same period last year. However, excluding the 104.7264 million yuan profit caused by the substantial changes in the fair value of the shares held by the Bank of Chongqing A-share listing in 21 years and the collection of liquidated damages for photovoltaic power stations and other occasional factors, the company's actual profit can achieve 25.53% growth. In 2022, the company's net profit after deducting non-return increased by 26.28%, mainly due to the increase in the scale of the company's income, the recovery of long-age accounts receivable and the increase in investment income due to the increase in the benefit of the invested unit. The company has accelerated technological innovation, strengthened production capacity construction and lean production management, deepened three-year action on state-owned enterprise reform, world-class management improvement action on standards, and special action on scientific reform, and the company's operating quality and efficiency have been significantly improved. according to the company's announced data, the company expects to deduct the non-net interest rate of 7.8% in 2022, a significant increase compared with 7.16% in 2021.

Equity incentives show confidence and actively expand production to lay the foundation for development: on September 19, 2022, the 17th meeting of the fifth session of the board of directors examined and passed the "restricted Stock incentive Plan (draft) of Chuanyi shares in 2022" and "the proposal on the buyback of Chuanyi shares by centralized bidding transaction". The company implemented the first buyback on September 22, 2022, and completed the buyback on October 14. A total of 950000 shares were repurchased with an average repurchase price of RMB 28.64 per share. On January 11, 2023, the company announced that the 2022 restricted stock incentive plan has been granted, and 3.9125 million restricted shares have been awarded to 559 eligible incentive targets at a price of 10.66 yuan per share. The construction of the third phase of the factory of the company is advancing rapidly. the new factory covers an area of more than 100mu, which is mainly used for the construction of intelligent control valve digital factory and R & D building. the new project is expected to increase output value by 2.71 billion yuan after reaching production, and the project construction is expected to be completed by the end of 2023.

The downstream demand is stable, and the company will continue to benefit from the trend of domestic substitution in the industry: the downstream of automation instruments includes petrochemical, power, metallurgical, pharmaceutical, new energy and other industries, and the company is expanding rapidly in emerging industries. you can enjoy the development dividend of emerging industries, while traditional industries will also have better demand during the period of economic recovery. At present, most of the domestic process industry automation instrument market is monopolized by foreign capital. Chuanyi, as the leader of domestic automation instrument, will have a better competitive advantage in the trend of domestic substitution.

Investment suggestion: Sichuan instrument Co., Ltd (603100.SH) has a leading advantage in the field of domestic automation instruments, the industry has a huge space of localization, while the downstream prosperity has a good support, the company is expected to achieve a net profit of 5.4pm in 2022-2024, corresponding to PE in 24-19-16, maintaining the "overweight" rating.

Risk hints: macroeconomic downside risks; capacity growth is lower than expected; the speed of domestic substitution is lower than expected.